How to diversify your business

Many strong businesses have diverse sources of income. The benefits of diversification were well and truly reinforced by the recent pandemic shutdowns. Now as a lot of business owners start to reappearing from the COVID-19 blockade, concerns regarding futureproofing are discussed. How can you ensure your business to be successful once the borders are shut? Does your old offering still be relevant in the current normal? Perhaps, most importantly, how can you be prepared if we’re forced into lockdown once more? It could be in diversification for business.

Why diversify?

This is something experts have seen play out over the first half of the year of 2020.

Business diversification, is a strategic way to minimize your risk when operating in an unpredictable economic environment. It is a way to are prepared should things go wrong.

Diversification protects you not just from unanticipated shocks , like COVID-19 However, it also shields you from more familiar problems like the emergence of new competitors.

There are plenty of diversification opportunities out there but says there’s plenty to keep in mind before diving in with both feet.

We wouldn’t advise anyone that you embark on a journey to do something crazy – like invest huge sums of money into something that you’re not comfortable with. If people consider their current business environment and their expertise, there are always peripherals around that they’re not obligated to be in which could offer enormous opportunities for them, because it’s still within their comfort zone.

Getting started

Before starting your diversification journey it’s important to do the research.

Be aware of where you’re headed and who your competition is particularly if you’re moving into a market that isn’t yet established.

As an example, if you’re producing equipment for the food industry, then a good place to go to might be for consumables. In a prosperous economy, the machinery is selling, but in a not so good economy, like right now, people still buy the consumables.

In the event that you do not have experience of the market you’re trying to enter then it’s like driving down the highway with your blindfold on.

It’s recommended that you stay with what you’ve learned, especially if this is your first time to dip your toe in the pool of diversification.

If you’re planning to diversify into a field that’s not within your skillset or business knowledge is a must, so you should make sure you find someone who does have that know-how. There are many things and not so good at others. So, hire people with the expertise and experience you require. If you’re not able to do that you’re only increasing the risk.

The risks to be considered

Diversifying your business also involves a broader focus.

Your objective is to satisfy your customer and grow your client base. This means that the issue you face when you diversify your company is that you’re spending manpower on your new offering. If you’re not carefulyou’ll are likely to use all your effort on the new opportunities and leave the old ones behind.

It’s incredibly important to ensure that your customers are satisfied with the ones you already have while growing your customer base.

Be careful not to chew more than you’re able to chew.

Be aware of taking the time in doing this. I’ve observed a multitude of businesses over the years who go broke by doing the wrong thing… including the largest, most sophisticated ones.

That’s the difficulty of being a small-scale company owner, he states. You have similar problems similar to big corporations, but with less resources to react to and learn from your mistakes, so you have to be extra cautious.

Any business change or decision to invest in business is not without risk, but there are some good risks and make some extremely smart decisions, earning your own money and be successful… if you’re smart about it.

Scooping up opportunity

Diversification became a necessity for some businesses like a gelato manufacturer who operates principally as a wholesaler to Gelato vendors and restaurants. But by February of this year, they began to see issues that were looming.

"I did not think it was going to affect us in any way, based on the news coming from overseas"

Then one of their largest clients, whose business relied heavily on tourists from abroad, stopped making orders.

At this stage, they were one week into lockdown when they realized that they required a diversification strategy for them to make it through.

"I began looking to see if there were any other businesses we could purchase that would be complementary to what we are doing"

"I found another business which was actually supplying supermarkets. I started working on buying part of the company during lockdown and ended up buying 50% of the business."

This move didn’t just bring in a new client base. It also gave them to enter into new business.

"Their manufacturing was carried out by a third-party contractor. Thus, by purchasing it, we’ve actually taken over their manufacturing contract"

"If we are forced to go through another lockdown or something else happens that’s not the end of the story, but we’ve got the retail side of the business which will continue to operate."

It was an excellent way for a business to take a chance to build on an advantage they already have.

It can feel like a do-or-die scenario. However, jumping into the wrong things could hurt you in the end.

"Part of the problem is that, when people get in trouble, they take poor decisions. Particularly now, with the effects of COVID-19" the expert states. "So my suggestion is to seek advice that isn’t emotional from someone who isn’t associated with your business.

"If you’re struggling emotionally or financially and stress is piling up, then seek help. Call the number and speak to someone. There are many smart people around who could aid, so don’t take on everything by yourself."